How can you figure the real cost of a house or a property? How can you know you are investing for value in today's minefield real estate markets?
Dr. Housing Bubble, bless him, has a very informative post about getting to the real price of a property.
He takes the current market mess and dissects it for the truth.
He also shows us exactly how he computes.
That brings us to the three methods he uses. (Most real estate investors and bankers used to use these methods before they lost their heads in recent years.)
Cost, sales comparison, and income capitalization are the real ways you should evaluate a property.
Dr. Housing Bubble points out most pointedly that #2, sales comparison, was the most abused by apprasiers during the last boom/bust.
I think it's important to review the basic fundatmentals as Dr. Housing Bubble points out. That will help us avoid making the same mistakes in the next housing bubble, which I predict will come in about 20 years.
Why? Because a new generation will be on the scene which won't remember this one.
Read Dr. Housing Bubble What Should a Home Really Cost?
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